Two officials with the Economic Development Corp. said the Long Island City tract met all their criteria. It overlapped with an area targeted for manufacturing growth, was close to an academic institution and had received previous public investment.

Many in New York saw something different: rampant gentrification. More apartments were built in Long Island City in 2017 than in any other New York neighborhood. Still, the census tract qualified under the IRS guidelines because it’s near poorer areas.

“I don’t feel the program is functioning as intended,” said Michael Gianaris, who represents the area in the New York state senate and has introduced legislation that would prevent developers from taking advantage of a similar break on their state taxes. “It would be different if it were helping genuinely distressed communities.”

Cuomo submitted the zones to Treasury in April, the same month city officials led Amazon executives on a tour of the proposed sites. After Treasury approved the state’s selections in June, Amazon became much more interested in Long Island City, according to two people familiar with the process. It wasn’t until the fall that the company focused on a waterfront site in the opportunity zone, the people said.

When the deal was announced in November, it faced criticism, and not just because of the hefty price tag—more than $2.5 billion in potential subsidies, almost all from the state. The governments also agreed to bypass the routine land-use review process, and the site Amazon picked was the same one where the city had been planning to build 5,000 apartments and a school.

Even the organization backed by Facebook Inc. billionaire Sean Parker that had pushed the tax breaks into being described the zone as a one of the nation’s “unfortunate outliers.”

Now that Amazon has promised not to use the tax breaks, focus has shifted to others eager to develop the neighborhood. And Amazon could still benefit indirectly. A development partner could claim the tax break, then rent space to the retailer at a discounted price.

Plaxall Inc., which owns the privately held portions of the development site, has said it won’t seek the tax breaks. Jodi Seth, a spokeswoman for Amazon, didn’t respond to questions about whether the opportunity zone designation had been a factor in the company’s choice of site or why it decided not to take advantage of the program.

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